The declaration makes no specific mention of Africa, and includes limited mention of African organisations, with the exception of the African Development Bank and a broad reference to regional trade agreements. Despite this, the summit covered a wide range of issues, many of which are of vital importance to African concerns.
The St Petersburg Development Outlook perhaps best demonstrates this focus, and concerns itself with six areas of relevance to African countries:
While the Development Outlook covers many issues of vital importance to Africa and developing countries in general, it should be noted that the Outlook is primarily a refining of pre-existing programmes, with new initiatives mainly taking the form of knowledge sharing. Few concrete, material commitments are contained within the Development Outlook, although such commitments may be possible in the ensuing work of related bodies.
More broadly, the Summit Declaration touches on many areas of importance to African states. Given the reliance on Africa on the state of the global economy, all issues discussed within the declaration are indirectly relevant to the continent, but six should be noted:
Point 2 is perhaps worth special mention. The summit took place against the back-drop of currency instability in large emerging markets, such as South Africa and India, driven by concerns that a weakening of monetary stimulus in advanced economies, particularly the United States, could slow credit-driven growth in emerging markets. These concerns were acknowledged by the communiqué, and it was emphasised that monetary policy will continue to be focused on the domestic price stability and growth. However there was little practical effort made to address these concerns, barring a call to carefully communicate and calibrate monetary policy actions. While the tapering has since been delayed, a more comprehensive response to this issue was perhaps needed to alleviate developing country, and African, concerns.
The summit released a range of action plans that aim to coordinate the action of the G20 countries and partner organizations:
Beyond the coordination of G20 activities, the declaration made extensive reference to international organisations and their work. These partner organisations include the Organization for Economic Cooperation and Development (OECD), the World Bank Group, the International Monetary Fund (IMF), the International Labor Organization (ILO), the World Trade Organization (WTO), the United Nations Conference on Trade and Development (UNCTAD), and numerous others. Indeed, large parts of the declaration seem to build directly on the work by these organisations. This highlights the G20’s commitment to acting as coordinating body for the pre-existing array of International Organisations. However, it also points to the G20s weak institutional capacity to act independently, and raises questions as to whether the G20 guides or follows these international bodies – whether it is dog or tail.
A list of selected G20 areas of cooperation and coordination are as follows:
Global economic governance has become more complex over the past twenty years. As new issues and actors have emerged, global economic governance directly affects a broad range of state and non-state actors, many of whom were previously only indirectly affected by these matters.
In 1999, in the wake of the Asian financial crisis in 1997-1998, the leading members in the G7 invited the ministers of finance from a select group of countries, including the G7 countries, and the European Union, to meet. This resulted in the formation of the G20 Ministers of Finance in September 1999 .
In 2008, as part of the response to that year's global financial crisis, the G20 was elevated to the level of a summit of heads of government. The next year, at the Pittsburgh G20 summit, the participating states declared that the G20 was the "premier forum" for global economic governance . This announcement, while its practical implications are not yet clear, amounted to a public acknowledgment that the G7 was no longer capable of managing the global economy on its own and needed to share this responsibility with a broader group of countries. However, it is important to note that the G7 still continues to meet and to play a role in the governance of the global economy.
The G20 refers to more than a grouping of countries. It is also a short-hand reference to a complex cluster of governance activities. The apex of this cluster is the annual summit of the leaders of the G20, which is the culminating event of an annual work programme consisting of two work streams.
The first, which is guided by ministers of finance and central bank governors, deals with a range of financial and economic issues . These officials meet regularly to discuss global economic conditions and to coordinate their responses to these conditions. They are supported by seven working groups, each consisting of and co-chaired by officials from G20 states. The seven working groups deal with developing the framework for strong sustainable and balanced growth, financial regulation, financial inclusion, the international financial architecture, energy and commodities markets, energy and growth, disaster management and climate finance. The working groups, in addition to their specific mandates, follow up on the decisions and requests of the G20 leaders, promote cooperation between the participants in the G20 process on particular issues, and help shape the summit discussions and communiqué.
The second track is the Sherpa track . This track, in which each leader is represented by an official, known as the leader's "sherpa", is responsible for the political aspects of the G20's work. Its workload is undertaken by working groups and it is supplemented, in some cases, by meetings of ministers other than ministers of finance. Currently, there are working groups for such issues as employment, agriculture and food security, energy, corruption, and development.
These activities suggest that the G20 plays three critical global economic governance roles.
First, it is a crisis manager. In this capacity it has forged agreement on the actions that the participants, individually and collectively, must take in order to try and resolve the current financial crisis.
Second, the G20 is the orchestrator of global economic governance. It is the setting in which the major economies meet with the leading international institutions—the IMF, the World Bank, the WTO, the UN—to discuss the key economic challenges facing the international community and coordinate their responses to these challenges. The G20, therefore, enables the relevant policy makers and technical experts from the participating countries and international organizations to meet and seek common understandings and approaches on particular issues of global importance.
Third, the G20 is a communicator. It helps to promote international global awareness of the challenges facing the global community and the approach that the most powerful countries are considering for dealing with these challenges.
There are four aspects of the G20 structure that should be noted.
First, the number of G20 participants, in fact, exceeds 20. They usually include a number of additional states that are invited by the G20 chair, who is the host state for that year's summit. Some of these states, such as Spain, are regularly invited in their own right and some are invited because of their position as chair of an important regional body, such as the African Union or the Association of South East Asian Nations. Africa’s representatives therefore comprise South Africa as G20 member, and two guests, the country which is Chairing the African Union in that year and a country representing the New Partnership for Africa’s Development (NEPAD). In addition, the regular participants include international organisations like the IMF, the World Bank, the regional development banks, the Bank for International Settlements (BIS), the Financial Stability Board (the FSB), the International Labor Organization (ILO),the Organization of Economic Cooperation and Development (OECD), the United Nations Conference on Trade and Developemtn (UNCTAD), the United Nations Development Program UNDP) and the World Trade Organization (WTO). These organisations can participate in both the summits and in those other G20 meetings that are most relevant to their work. Since the G20 does not have a permanent secretariat, the participating international organisations usually assume responsibility for preparing the background studies and policy proposals requested by the leaders of the G20. For example, the FSB and the IMF coordinate studies on financial regulatory issues. In addition, these organisations can be expected to work with their non-G20 member states to implement applicable recommendations of the G20. It is not clear what role, if any, they may play in informing the G20 about the views of their non-G20 member states.
Second, the G20 has begun a process of outreach to other stakeholders in the global economy. This process, which is managed by the chair of the G20, comprises engagement with groups representing business, labour, think tanks, civil society, and youth from the G20 countries, referred to by relevant acronyms e.g. B20 stands for Business 20. These meetings, which usually lead to reports that feed into the G20 processes, are an opportunity for the G20 to engage stakeholders. The involvement of these groups has grown. For example in the year leading up to the 2014 Summit, a series of meetings and forums were held, culminating in respective B20, C20, L20, and Y20 Summits and a T20 Conference .
Third, the G20 has initiated a peer review process, called the Mutual Assessment Process that is designed to ensure that the economic and financial policies of the G20 are coordinated and compatible. In this process, each of the states are expected to report on their macro-economic policies and to have them reviewed by their peers in the G20. The process is managed by the IMF.
Fourth, the G20 realises that reducing poverty is integral to the G20’s objectives of achieving strong, sustainable and balanced growth and ensuring a more robust and resilient global economy. It is an issue directly relevant to the group, as two thirds of the world’s poor live in G20 countries. A Working Group on Development, commonly referred to as the Development Working Group (DWG), was established at the June 2010 Seoul Summit, along with a 2010 Seoul Multi-Year Action Plan on Development. The DWG emphasises the role of economic growth in reducing poverty and opening up opportunities for the poor. The G20 is trying to complement international efforts towards further progress on internationally agreed development goals and ensure that any future G20 development agenda is flexible enough to respond to the Post-2015 Development Agenda. The most recent Summit, in late 2013 in St Petersburg, Russia, produced a Development Outlook as a successor to the Seoul Multi-Year Action Plan and took action on the 2012 Los Cabos Summit’s call to put in place an accountability process to monitor implementation of ongoing and future G20 development actions, by producing the St Petersburg Accountability Report on G20 Development Commitments. The DWG will now produce a comprehensive accountability report every three years .
Given its important role in global economic governance, it is striking that the G20 remains an informal grouping of states and international organisations. It is not based on a treaty and has no formal international legal personality. In addition, it has no permanent headquarters or secretariat.
As a result, the reports, communiqués, and documents that it issues have no formal international legal status. Thus, when G20 states make firm commitments in the communiqués and other G20 documents, they do not constitute obligations for which states can be held legally responsible if they fail to comply.
This does not however mean that non-compliance has no consequences for either the G20 states or for other stakeholders. First, in some cases, a G20 country's failure to comply with the G20's decisions can adversely affect its credibility, its relations with other G20 states, and its access to financing. In addition, G20 decisions can have, and in some cases are intended to have, an impact beyond the participants in the G20. For example, non-G20 states that fail to comply with G20 financial regulatory and transparency requirements can suffer adverse consequences in terms of their borrowing costs, the attractiveness of the country to foreign investors, and their relations with the states and international organisations that participate in the G20 . Non-state actors in these countries, for example financial institutions, can suffer analogous adverse consequences. Thus, for these states, and the non-state actors in these states, the decisions and actions of global economic governance de facto have a compliance pull that is stronger than for the richer and more powerful states.
This differential impact on the various stakeholders in the global economy is exacerbated by the legal status of the current arrangements. It makes it difficult for adversely affected stakeholders to hold a key actor like the G20 accountable for its decisions and actions.
This situation of power without accountability is troubling and requires a response. One possible response is a framework for assessing the outputs of global economic governance decision making, as is outlined in this G20 Monitor.
|AfDB||African Development Bank|
|BIS||Bank for International Settlements|
|CAADP||Comprehensive Africa Agricultural Development Programme|
|ECOWAS||Economic Community of West African States|
|FAO||Food and Agriculture Organization|
|FSB||Financial Stability Board|
|FSF||Financial Stability Forum|
|G-7||Group of Seven|
|G-20||Group of Twenty|
|IFI||International Financial Institution|
|ILO||International Labour Organization|
|IMF||International Monetary Fund|
|IOSCO||International Organization of Securities Commissions|
|MDB||Multilateral Development Bank|
|MDG||Millennium Development Goal|
|NEPAD||New Partnership for Africa’s Development|
|OECD||Organisation for Economic Co-operation and Development|
|OPEC||Organization of the Petroleum Exporting Countries|
|UDHR||Universal Declaration of Human Rights|
|UNCTAD||UN Conference on Trade and Development|
|UNDP||UN Development Programme|
|WFP||World Food Programme|
|WTO||World Trade Organization|
SAIIA Occasional Paper No 236, July 2016
Dear Editors and Journalists
The UCT Graduate School of Business Connect and the South African Institute of International Affairs will host a round table with Dr Andreas Dombret, Member of the Executive Board Deutsche Bundesbank, on 'Global political uncertainty and its implications for the post-crisis supervisory and regulatory regime.'
South Africa hosted the fifth BRICS Summit in the city of Durban on 27 March 2013. Prior to the Heads of State summit, the BRICS Academic Forum as well as the BRICS Business Forum were likewise hosted in the city of Durban. This Summit was unique for the fact that it was the first time the Summit was hosted in Africa; the Summit further marked the first full hosting cycle by all the BRICS countries, marked the consolidation and institutionalisation of the BRICS group; and was the first time that the Summit was dedicated to a continent (Africa), rather than solely to BRICS issues. For South Africa, it was also an opportunity for the country to prove its worth and value in the group, and it chose to do this through the ‘Africa’ ticket, bearing in mind that the campaign for membership was premised on the ‘South Africa as a gateway to Africa’ ticket. It is evident that the BRICS 2013 Summit was very much centred on South Africa and Africa.
Suresh P Singh has over 15 years of research experience. He holds a Masters Degree in Economics from Rabindra Bharti University, Kolkata, India. At CUTS, he works on issues such as international trade, climate change and agriculture, sustainable consumption and production.