Africa and the G20’s Moment of Truth


G20 China 2016

By: Olesegun Obasanjo,

somalilandsun– This year is turning out to be one of global disruption. We’re seeing not only political upheaval and economic uncertainty, but also transformational innovation and the emergence of fresh thinking.

Global-governance institutions are facing many challenges: slowing economic growth, volatile financial markets, falling commodity prices, emerging-economy risks (especially in China), refugee and migrant waves, geopolitical tensions, rising inequality and social fragmentation, and the threat of violent extremism. That’s why, in an increasingly atomized and uncertain world, political leaders should commit to a new multilateralism at this month’s G20 summit in Hangzhou, China.

Specifically, to make good on the summit’s theme – “Toward an innovative, invigorated, interconnected, and inclusive world economy” – G20 governments should focus on financial stability and sustainable growth in developed as well as developing countries, especially in Africa. A successful summit requires member governments to reaffirm – and expand upon – commitments in four areas.

First, G20 countries must acknowledge that energy, climate, and development are closely interrelated and stop subsidizing carbon emissions. Many G20 countries are currently spending billions of dollars subsidizing efforts to tap new coal, oil, and gas reserves. Rather than using taxpayers’ money to fuel climate change, these governments should be pricing carbon out of the market through taxation (an imperative that is especially relevant for Africa, which will pay the highest price for potential climate catastrophes, despite having contributed very little to the problem).

At the 2009 G20 summit in Pittsburgh, member governments agreed to “rationalize and phase out over the medium term inefficient fossil-fuel subsidies that encourage wasteful consumption.” The G20 should now follow through on that commitment and set a clear timetable for ending fossil-fuel subsidies, including full transparency regarding such spending from 2017 onward and a ban on exploration and production subsidies by 2018.

Second, the G20 must commit to fighting tax evasion and to unraveling the murky system of tax havens and shell companies (brought to light earlier this year by the Panama Papers) used to pump money out of Africa. According to the African Union’s High Level Panel on Illicit Flows, chaired by former South African President Thabo Mbeki, Africa loses more than $50 billion every year from illicit financial outflows. G20 members should strengthen tax disclosure requirements, prevent the creation of shell companies, intensify efforts to fight money laundering, and establish public registries of company ownership.

The G20 and the OECD have already outlined measures to counter tax-avoidance methods such as base erosion and profit shifting. These efforts should be accelerated, and the international community should support African countries’ own efforts to reduce illicit financial outflows, especially through improper trade invoicing, and to strengthen tax and customs administration. The G20 owes Africa a credible and effective solution to this problem.

Child mortality in AfricaThird, G20 countries should support African agriculture and fisheries. Food production in Africa is currently so underfunded and excluded from financial services that the continent imports $35 billion worth of food products every year. And yet Africa has ample natural resources to feed itself and export to the rest of the world if its potential is unlocked.

Two-thirds of Africans rely on agriculture or fisheries for their livelihoods. But illegal, undeclared, and unreported (IUU) fishing off Africa’s coasts has reached epidemic proportions, depriving coastal communities of income and opportunities. Corruption and illegal fishing do not acknowledge national borders; they require an international response.

G20 members should codify IUU fishing as the transnational crime that it is and place it under the jurisdiction of Interpol, with police, customs agencies, and justice ministries playing a more active role in enforcement. Given that IUU represents a form of theft of national revenues comparable to tax evasion, the G20 has grounds to act on this front.

As for agriculture, G20 member governments should follow through on commitments they made at the Pittsburgh summit in 2009 to increase funding for developing countries by $21 billion. Keeping that promise is long past due.

Finally, the G20 must help close Africa’s energy-financing gap – estimated at $55 billion per year through 2030 – and support renewable-energy production on the continent. Increasing Africa’s energy output would boost economic growth for African countries and, in turn, for the world economy at large. What’s more, developing Africa’s low-carbon energy sources now would allow it to avoid the carbon-intensive growth model adopted by rich countries and other emerging markets, especially in Asia.

The G20 has already set African infrastructure financing as a priority, and donor countries have developed a range of private-financing mechanisms for this effort. They should now put those tools to use.

The Hangzhou Summit is a moment of truth for G20 member Olesefun  Obasanjo governments that have made past commitments to Africa. Following through on their pledges would help drive the continent’s industrialization, while promoting greater, inclusive, and sustainable growth globally. As Africa Progress Panel Chairman Kofi Annan has repeatedly said, “The only promises that matter are those that are kept.”

Olusegun Obasanjo, a former president of Nigeria, is Chair of the Tana Forum and a member of the Africa Progress Panel.