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Left to right: World Bank president Ajay Banga, Brazil President Luiz Inacio Lula da Silva, Indian Prime Minister Narendra Modi, President Cyril Ramaphosa and US President Joe Biden at the G20 summit in New Delhi, India. Picture: EVAN VUCCI/REUTERS
Left to right: World Bank president Ajay Banga, Brazil President Luiz Inacio Lula da Silva, Indian Prime Minister Narendra Modi, President Cyril Ramaphosa and US President Joe Biden at the G20 summit in New Delhi, India. Picture: EVAN VUCCI/REUTERS

On September 9, the AU was made a permanent member of the Group of 20 (G20). SA is an original member of the group, though its influence has not been effective in achieving the country’s and the continent’s objectives. Africa’s membership will enable SA to bundle its objectives with the rest of the continent. In this way, the urgency of African challenges will be appreciated and addressed. 

The G20 is a bloc of 19 wealthy and politically influential countries, which holds annual meetings with the aim of directing the global economic landscape and other international priorities. The EU makes up the 20th member. The introduction of the AU, now makes it a group of 21 (19 countries, plus the EU and the AU), giving rise to the possibility of a name change to G21. Formed in 1999, the group has evolved from a strict focus on finance and economics, to include matters on climate change, politics and human rights. 

In order for the continent to benefit from the group, it needs to have both the capacity and the ability to negotiate at such an international level. Typically, this requires competent personnel with in-depth knowledge of agenda items and the relevant ideological awareness of how Africa’s expectations can fit into the G20 agenda. An understanding of the continent’s haggling abilities at other multilateral institutions (UN, World Trade Organisation, IMF, World Bank) shows that Africa still has vulnerabilities and skills gaps in this area. Thus, an audit of the AU’s staff complement is vital to improve the G20’s membership value. 

Some experts have stated that the timing of Africa’s membership indicates that several advanced economies in the G20 are aiming to  render ineffective the Brics economic bloc. After 15 years in existence, Brics has finally succeeded in organising the major “Global South” economies, thereby threatening the traditional multilateral order. Among the potential casualties of a successful Brics grouping are: use of the US dollar in international trade, the unrivalled military power of northern countries (Nato), and the replacement of the IMF and World Bank as indispensable multilateral financial institutions.

Additionally, China’s growing influence around the world, and more so, in Africa, has left the continent’s traditional economic and political partners (the West) lagging behind. Under China’s flagship Belt and Road Initiative (BRI), for instance, 150 countries received infrastructure spending or loans from Beijing, in a strategic mission that strengthened the Asian giant’s influence, globally. The BRI may be one of the reasons why the US introduced an alternative infrastructure programme at  the recent G20 leaders’ summit. Unveiled as the “India Middle-East Europe Economic Corridor”, the programme will focus on railway and port investments linking India to the Middle East, Europe and the US. The project will be vital in expediting the export of oil from the Middle East to India, Europe and the US. 

At the end of the September meeting in New Delhi, leaders signed a declaration that conveyed the agreements reached. It is also noteworthy that the G20 does not have the authority or power to enforce summit resolutions. However, the debates and contributions at the forum create room for co-operation and generally direct the policies of member countries in line with decisions made at the summit. A review of some of the resolutions reveals some limitations, biases and challenges besetting even this premium group. These include agreed positions on international trade, climate change and sustainable economic growth (through increased flows of foreign direct investment — FDI).

Regarding international trade, the grouping says members will work to ensure it is unimpeded and fair. However, for decades, despite the existence of the G20, international trade has been unfair and characterised by barriers that block exports from Africa into advanced and emerging economies. Northern economies (particularly those in the G20), are infamous for subsidising their farmers to a level where their agricultural produce becomes unsustainably cheap. In 2020, the OECD’s “Agricultural Policy Monitoring and Evaluation” report revealed that capable countries were subsidising their farmers to the tune of $700bn a year.

This has worked against the competitive advantage of Africa, which originally produced cheaper agricultural commodities but lost competitiveness due to an incapacity to subsidise their farmers. Therefore, African nations that were supposed to be exporting to the US and EU have now become net food importers, owing to the insensitivity and unfairness of advanced economies. Thus, they should be informed of past trade dynamics if they expect G20 countries to encourage free global trade.

On the matter of climate change management, the G20 decided to drastically scale down the input of coal power plants in electricity generation. Conversely, there is no similar focus on petroleum products that pollute as much as coal. Since a great number of developing economies (including those in Africa) are dependent on coal for power generation, this commitment by the G20 will be difficult to align with. Most developing economies have to  decide between fighting climate change or poverty.

Knowing the urgency of poverty in Africa, it will be a priority ahead of climate goals. Further, the failure to equate the need to reduce petroleum’s part in the same manner as coal shows that clarity and comprehension of pertinent global issues are sometimes lacking in the grouping. Once more, this works to reduce expectations on the part of the new members such as Africa. 

The declaration on sustainable economic growth declares that the G20 will encourage increased FDI flows into member states to drive economic growth. If Africa experiences more FDI flows due to this commitment then there is reason to acknowledge the G20 for such a breakthrough. Nevertheless, for a continent that received only 3.5% ($45bn) of total global FDI flows ($1.3-trillion) in 2022, it may serve Africa well to approach its expectations with caution as well. Typically, a disproportionate part of global FDI flows moves strictly within the advanced OECD economies and very rarely into developing regions such as Africa. Whether the G20 will be able to change this trend remains to be seen.

It can be inferred, from the points outlined, that though the G20 is a prominent group in which it is necessary to participate, expectations have to be rightly managed in order to avoid disappointment.

Tutani is a political economy analyst.

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