Global Redesign Series: The G20 Directive
Wednesday 10th June 2009 - 3:30pm - 4:30pm
• Donald Kaberuka • Lord Malloch-Brown • Trevor Manuel • Ngozi Okonjo-Iweala
• Robert Greenhill
Wednesday 10 June
Robert Greenhill,Managing Director and Chief Business Officer, World Economic Forum, opened the session by questioning whether traditional government structures are sufficient to deal with an economic crisis of this magnitude, and the role Africa hoped to play in a Group of 20 meeting of financial ministers.
Having African countries at the table certainly represents progress, but one of the fundamental problems is European over-representation, argued
Trevor Manuel, Minister of the National Planning Commission (NPC) of South Africa. He portrayed the current crisis for Africa in terms of its movement from the purely financial sector into the real economy, the exacerbation of persistent global imbalances and the inequalities in the speed of financialization in and between countries. He suggested that one reason behind the drafting of the G20 communiqué was to demonstrate a very strong commitment to resolve the crisis, but lamented the absence of low-income countries that would be most affected by a shrinking global economy.
Lord Malloch-Brown, Minister of State for Africa, Asia and the United Nations, Foreign and Commonwealth Office, United Kingdom, agreed that there is an urgent need to demonstrate that those representing 85% of the global economy are crafting a solution, but also confessed that despite their zeal to support the soft power of the negotiating table “[Europe] often uses hard elbows to get a seat there.” He concurred that poorer countries are not adequately represented, and that it is perhaps a mistake that the G20 draws unto itself the legitimacy of a global problem-solving group when it rather should function as a pressure group.
Some positive outcomes of G20 directives include the decision to provide more funding to the IMF and a stimulus package for development finance. However,
Donald Kaberuka, President, African Development Bank (ADB), Tunis, was concerned that this may not be enough, as there have been an unprecedented number of applications to his and other global institutions, most notably from countries that have never needed to apply. He highlighted the cases of African nations that have assiduously followed World Bank and International Monetary Fund prescriptions only to find themselves in further need of assistance. “This is the first time Africa can say that the source of their problems is external and the effects are internal.”
Ngozi Okonjo-Iweala, Managing Director, World Bank, Washington DC; Co-Chair of the World Economic Forum on Africa drew further attention to the dilemma of under-representation stating: “The results show that being around the table matters.” She detailed how the emerging economic powers that were invited are able to negotiate significant, targeted development assistance packages for their key industries, whereas the uninvited, poorest nations have still not secured assistance.
Manuel echoed this sentiment by decrying the fiscal shortages the developing economies would experience given the intention of the largest economy in the world to remove over US$ 1 trillion in loans from the liquidity market. He also elicited agreement from panellists when he contrasted the ease of tax and resource transfers out of Africa with the difficulty of attracting cash inflows – even in the form of a bond.
Kaberuka hastened to debunk the theory that aid does not lead to growth in Africa. He maintained that governance and overall resource management are relevant factors in growth, and that good governance will always convert aid flows into growth.
Key outcomes and consensus:
• Low-income nations must be represented at G20 summits
• Cash flows out of Africa are enshrined in dual taxation agreements, but Africa should not have to apply for bonds to achieve a return flow of cash from industrialized nations
• Aid is not the problem; it is rather poor governance among its recipients that should be corrected
• African countries need to articulate what they want if they choose to attend such summits
• Lower and medium income countries should form their own grouping to achieve solutions. To be part of an existing group - or to wait to be invited – may not create an effective body of decision-makers
• The issue of tax havens needs to be readdressed in terms of the cessation of financial flows to poorer nations and the prevention of criminal activity /par
President, African Development Bank (AfDB), Abidjan
Educated at universities in Tanzania and Scotland; PhD in Economics, Glasgow University. Formerly, c...
Deputy Chairman, Rothschild, South Africa
Training in Civil Engineering. Formerly: Community Organizer; 1983-90, Regional Secretary and Nation...
Coordinating Minister for the Economy and Minister of Finance of Nigeria
AB in Economics, Harvard University; PhD in Regional Economics and Development, MIT. 2003-06, with N...
Lord Mark Malloch-Brown
Special Adviser; Member of the Leadership Team, FTI Consulting, USA
Degree (Hons), History, Magdalene College, Cambridge; MSc, Political Science, Univ. of Michigan. For...
Founder, Global Canada, Canada
BA, University of Alberta; MA in International History, London School of Economics; MBA, European In...