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Tuesday, June 18, 2024

Should Africa celebrate its G20 membership, yet?

Article by Kevin Tutani

LAST week (September 9), the African Union was made a permanent member of the G20, after a series of requests and proposals on the matter by several prominent leaders, including Prime Minister Narendra Modi (India), President Joe Biden (USA) and President Cyril Ramaphosa (South Africa), among others. The differences in the political persuasions of the people who supported Africa’s entry into the powerful organization invoke a curiosity to understand the implications of the continent’s participation in the group, whether it will be of benefit or not, and to whom the benefit will accrue.

The G20 is a bloc of 19 wealthy and politically influential countries, which holds meetings, yearly, to coordinate policies in member countries, with the aim of directing the global economic landscape and other international priorities. The European Union makes up the 20th member, with its seat, under the European Commission, representing every country within the EU bloc. Membership of the G20, before the 9th of September, comprised, Argentina, Australia, Brazil, Canada, China, France, Germany, India, Indonesia, Italy, Japan, Mexico, South Korea, Russia, Saudi Arabia, South Africa, Turkey, UK, USA and the EU. Thus, 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 original mission of the group was to coordinate financial policies of rich countries, so that they would be able to respond to global financial crises and promote global economic growth. At the outset, the G20 was an association of finance ministers from the wealthy countries. Almost a decade later (2008) heads of state (presidents) were incorporated into the group and its influence has been growing since then.

Through time, the group has evolved from a strict focus on finance and economic matters, to include climate issues, human rights and political matters. It has become a hub where the prevailing global economic and political situation is determined and negotiated.

Heads of state, meet each year, with a declaration of resolutions (agreements) issued out, at the end of each summit. The resolutions are meant to guide policy decisions in member countries.

The chairmanship of the group is assigned to one of the members, each year. The presiding chairman consults other members to set the agenda (negotiation points) for each summit. The chair of the 2023 meetings, was India, which transferred the responsibility to Brazil at the end of this year’s heads of state summit, on 10 September. This means that the 2024, G20 meetings, will be held in Brazil. South Africa will host the meetings, thereafter, which is in 2025.

For the continent to benefit from the group, it needs to have both the capacity and ability to negotiate, at such an international level. Interestingly, at the existing multilateral bodies such as the UN, WTO, IMF and World Bank, for example, African nations are struggling to sustain diplomatic missions which are responsible for negotiations at the organisations.

With regards to the World Trade Organisation (WTO), African countries are still skipping several Joint Service Initiatives (negotiations), since they do not have the finances required to sustain adequate staff at the institution’s headquarters in Geneva. As a result, several binding agreements will be approved, without the input of such incapacitated nations.

Apart from capacity, the continent needs to ensure that it has enough skills to negotiate at such a stage. 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 shows that the continent still has vulnerabilities and skills gaps in this area. Thus, an audit of the AU’s staff compliment is vital, in order to improve the G20 membership’s value to Africa.

If asking the right questions is a part of a great evaluation process, then it is vital for Africans to interrogate why it is only now, that they are being accepted into the eminent group of 20. Additionally, support for AU’s membership has been coming from very unlikely participants, such as the US.

Some experts have stated that, the timing indicates that several advanced economies in the G20, are aiming to reduce the effectiveness of and cooperation in the BRICS economic bloc. After 15 years in existence, the BRICS has finally succeeded in organizing the major “Global South” economies, thereby threatening the traditional multilateral order. Among the potential casualties (victims) of a successful BRICS grouping are the use of the US dollar in international trade, the unrivalled military power of Northern countries (NATO), replacement of the IMF and World Bank as indispensable multilateral financial institutions, etc.

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. The new relationships which China has managed to create around the world, are leaving Western nations, with less bilateral opportunities. Under China’s flagship, Belt and Road Initiative (BRI), for instance, 150 countries received infrastructure spending or loans from Beijing, in a strategic mission to strengthen the Asian giant’s influence, globally.

The BRI may be one of the reasons why the US introduced an alternative infrastructure program at this year’s G20 leaders’ summit. Unveiled as the “Partnership for Global Infrastructure Investment”, or the “India Middle-East Europe Economic Corridor” (IMEC), the program will
focus on railway and port investments, linking India, to the Middle East, Europe and USA (through ports).

The project will be vital in expediting the export of oil from the Middle East to India, Europe and the USA.By joining the G20, the AU can now bring emphasis to challenges faced by the 55 African nations, which it represents. There is also an opportunity to table solutions or proposals to address the world’s problems, from an African viewpoint.

It is also noteworthy to be clear on the fact that, the G20 does not have authority or power to enforce summit resolutions. However, the debates and contributions at the forum, create room for cooperation and generally direct the policies of member countries in line with the decisions made at the summit.

At the end of the September meeting in New Delhi (India), leaders signed a declaration which conveyed the agreements reached. The comprehensive declaration document contains the group’s decisions on 10 broad negotiation points (agenda items).

A review of some of the resolutions made, can reveal some limitations, biases and challenges besetting even this premium group. These include agreed positions on; the war in Ukraine, sustainable economic growth (through increased FDI flows), international trade as a channel for global economic growth and responses to climate change.

With regards to the war in Ukraine, there was a plea to have the war de-escalate and particularly to restore the initiative which gave way for Ukrainian agricultural products to be exported to different consumer destinations around the world, through the black sea (Black Sea Grain Deal).

As it stands, Ukrainian grain is stockpiled at ports in the country with a portion being transported by railway into Europe through the western side of the nation. This route is more expensive and limits the quantity of food which can be exported to the rest of the world.

The determination by the G20 to have the black sea route restored seems noble and just, until one has a clear picture of the other details of this deal, which the group is blatantly ignoring.

The G20 declaration failed to articulate that, the reason the grain deal was revoked is because Russia’s terms (requests) in the grain deal, were not fulfilled, for over a year, since the deal came into being. Fertilizers from Russia have been blocked by European states, and Russian banks are still sanctioned by Western financial systems, in contrast to the grain deal’s terms that this should not be so.

Therefore, the declaration on the war in Ukraine shows that the bloc is losing the basic requirement of clear communication, honesty, and objectivity. Africa has to be ready to experience some lacklustre responses on matters it holds in high regard as well, as it joins the group. This conveys the importance of managing expectations, in order to avoid frustration.

The declaration on sustainable economic growth, outlines that the G20 will encourage increased foreign direct investment (FDI) flows into member states, in order 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 which received only 3.5% ($45 billion) of total global FDI flows ($1.3 trillion), in 2022, it may serve the continent 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.

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

This has worked against the competitive advantage of Africa, which originally produced cheaper agricultural commodities but lost competitiveness due to an incapacity to subsidize their farmers. Therefore, African nations which 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. Ironically, the same Northern economies rebuke African nations for government interventions in their economies, labelling those which do as, “socialists” and “incompetent”.

Therefore, one would be uniformed of past trade dynamics, if they expect that the G20 countries have an authentic commitment to encourage free global trade.

On the matter of climate change management, the G20 outlined that there is a need to massively scale down the input of coal power plants, in electricity generation. Conversely, there is no similar focus on equally polluting petroleum products. Since a great number of developing economies (including those in Africa) are dependant on coal for power generation, this
commitment by the G20 will also be difficult to accept and align with. What is more, most developing economies have to make a decision between fighting climate change or poverty.

Knowing the urgency of poverty in Africa, it is clear that 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 is sometimes lacking in the grouping. Once more, this works to reduce expectations on the part of the new member (Africa).

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

There does exist an opportunity for Zimbabwe to work on resolving some of its legacy (prolonged) challenges through the AU’s membership. It will be easier to work on the removal of Western sanctions on the country, using the G20 channel. With a good team of AU negotiators, the injustice can be revoked.

Moreover, as Harare works towards resolving its $8.3 billion in debt arrears, the AU may request that the country join the G20 Common Framework for Debt Treatments. Zambia has successfully participated in the program, with the result of a moratorium on its debt repayments and overall reprofiling, which will reschedule their debt to more than 20 years. Such a framework is urgently needed for Zimbabwe.

As can be understood from the various scenarios outlined above, Africa needs to manage its expectations now that it is a member of the G20. Although breakthrough resolutions can be secured through the group, it may not necessarily be assured that such will happen.

Secondly, the AU needs to invest in capacity and personnel who will represent the continent adequately at this global platform. Thirdly, there is a need for the continent to not be alienated from its other partners such as the BRICS, through the glitter of its new-found home in G20. Lastly, Zimbabwe has room to negotiate for the removal of Western sanctions and resolving its debt overhang through this, more precise vehicle.

Understanding how to leverage the greatest value out of the G20, or lack thereof, will determine whether the membership is useful or rather, symbolic.

Kevin Tutani is a political economy analyst. He can be contacted at tutanikevin@gmail.com

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