The G20 presidency that could have been: SA’s missed chance
- William Gumede
SA's G20 presidency wrongly prioritised global, long-term interventions that try to foster global structural economic changes, but are not immediately feasible.
A better G20 presidency should have prioritised a narrower, more practical and directly beneficial to South Africa and Africa, set of objectives.
This means that South Africa has failed to take advantage of its year-long G20 presidency to use the close proximity to the largest economies in the world to prioritise secure alternative markets, foreign investment, capital and development funding, which the country’s desperate need to lift economic growth, create jobs and tackle poverty.
The G20 presidency has a short window of a single host year, so focusing on the right issues are critical. Countries all over the world are searching for alternative markets following US President Donald Trump’s sweeping tariffs against allies and foes, which has making exporting to the US markets in many cases uncompetitive. Most countries are also trying to find alternatives to China’s flooding of their markets with state-subsidised products, which are undermining the economies of recipient countries.
With China also facing US tariffs, the country has stepped up the exports of its products to non-US markets – with many industrial countries responding by erecting trade walls against Chinese products and looking for non-Chinese alternatives.
With South Africa's G20 presidency at the start of US President Donald Trump's global tariffs, and China ramping up its state-backed exports to non-US markets, forcing many countries to find alternative markets, South Africa was gifted with an opportunity to use its closeness to the world’s largest economies – and their companies and their capital, to strike alternative trade, investment and development funding deals for itself and African countries.
The world is experiencing a period of unpredictability, because of the US driven trade war, China’s flooding of markets, the Russia-Ukraine war, Gaza conflict, climate change and overlapping other shifts such as climate change and technology transformations. Trump has up-ended global trade rules, disrupted global institutions such as the World Trade Organisation, the United Nations and the World Bank, International Monetary Fund and global trade partnerships and blocs, such as BRICS.
The US has withdrawn funding from many multilateral organisations. In fact, multilateralism itself is in crisis, as every country now try to protect their own interests. The WTO, World Bank, IMF and the UN are all internally focused, struggling to repivot in these fast-changing global environment.
The US tariffs may also trigger a downturn in the global economy – which is reinforcing the move by countries to prioritise strengthening their domestic economies, but putting less resources into external development funding, multilateral organisations and global institutional reform causes.
Even the BRICS formation, is under pressure, pushed into two directions by Trump’s tariffs and China’s flooding of markets. Many of the established BRICS members are also seeking ways to find ways to compromise with the US, but also to find alternatives to prevent China from flooding their markets; non-members want to join BRICS to escape US tariffs and ironically, Chinese goods. These two centrifugal forces have reduced the cohesion of the BRICS formation.
South Africa’s G20 presidency, includes focusing on reducing global inequality, securing African debt forgiveness, and reforming the international financial architecture. However, these global structural change reforms need global partnerships – not currently possible because US President Trump has disrupted traditional global partnerships.
Trump is up-ending global structures, institutions and partnerships, through his sweeping tariffs. Trump has cut development funding to South Africa and many developing countries. The Russia-Ukraine war and the Gaza conflict have pushed many industrial countries to channel development funding from African and developing countries to Eastern Europe and Gaza. Trump’s tariffs are forcing industrial countries to further reduce development funding to their domestic development projects.
For South Africa through its G20 presidency to try to push for global structural changes at this uncertain time, with global structural changes still on-going, when multilateralism is in disarray and when almost all countries are turning inward, focusing on protecting their own economic interests, is a real wasted opportunity.
Sadly, South Africa’s G20 presidency strategy to a large extent mirrors South Africa’s foreign policy: old-school solidarity based, rather than aggressively promoting the interests of South Africa - the approaches to foreign policy taken by the US, China or India.
South Africa’s G20 presidency strategy reflects largely ANC priorities. The ANC, although not the majority party anymore, and part of a multiparty Government of National Unity has insisted that its party policies automatically become the GNU policies, rather than cobbling together new policies, with its governing partners, given that it is not the majority party anymore, but now, part of a multiparty government. If the ANC had involved its GNU partners in setting out the G20 presidency agenda, it is very likely that they would have produced more pragmatic, more strategic and more South Africa-interest priorities.
This means, South Africa should have focused on attracting foreign investment and capital, and new technology to South Africa and to Africa.
Rather than focus on big ideas global issues, which are not going to be resolved overnight, and which there is little aptitude for now, as G20 countries prioritise the US trade tariffs and China’s state-subsidised domination of global manufacturing.
In the context of Africa, South Africa should cobbled together more practical immediate initiatives to boost investment, lift economic growth and help Africans deal with the negative impact of the Trump’s administration slashing of development aid, and developed countries reduction of development aid to focus on their economies in the light of the impact of the US tariffs, Russia’s war against Ukraine and China’s state-subsidised flooding of their markets.
Many developed countries have also redirected development aid from Africa to rebuild Eastern Europe, and the conflict zones of Gaza and the Ukraine. It would have been more useful if South Africa had used its G20 presidency to lobby for an increase in development aid from non-US developed countries that are members of the G20.
More than half of African countries are experiencing conflict – meaning infrastructure development, investment attraction and poverty reduction is impossible. SA’s G20 presidency should have focused on resolving African conflicts, with the help of the world’s largest economies.
In 2021, the African countries signed the African Continental Free Trade Area (AfCFTA) pact designed to unify all 1.4 billion people under Africa's 54 nations into a single market. 48 African countries may have ratified the free trade deal, but only 24 African countries are actively trading under it. Under South Africa’s G20 presidency, South Africa could have mobilised the African Union to get more serious about getting the free trade area to work.
As the G20 president, this was an opportunity to strike commercial, development and trade deals with G20 economies for those 24 African countries that are actually trading among each other.
South Africa and Africa’s infrastructure is deficient. SA could have used its G20 presidency to get G20 countries to partner in building Africa’s infrastructure.
South Africa could have focused on securing immediate commercial partnerships for South Africa and Africa. It would be more useful for South Africa to strike critical mineral deals for African countries with individual G20 countries.
China controls critical minerals, and all industrial countries are trying to desperately diversify from China choke on the global supply of critical minerals. Many African countries have critical minerals. This offered the opportunity for South Africa to offer South Africa and African critical mineral deals that would involve South African and African critical minerals in return for guaranteed prices for South African critical minerals, infrastructure investment, beneficiation and technology and skills transfer.
South Africa could have shown during its G20 presidency that it is open for business. However, South Africa has actually shown that it is closed to business. President Cyril Ramaphosa and ANC leaders have insisted on continuing failed, outdated ideological policies, rather than change course, adopt more growth-generating policies, and so presenting the country as more investment friendly.
The ANC has doubled down on these anti-investment policies. For example, the ANC’s expropriating without compensation policy, undermines property rights, which includes shares, pension funds and businesses from local and international companies and individuals also.
The ANC has doubled down on Black Economic Empowerment, which has empowered mostly ANC political capitalists, individuals who are ANC connected politicians, who often set up businesses only to secure a government contract or a shareholding in a white-owned business, has undermined genuine black entrepreneurs who are connected to the ANC, who cannot secured government contracts or BEE partnerships with white-owned businesses. Changing BEE to allow for alternatives: such as job creation, skills development for youth, science, technology and mathematics (STEM) education, manufacturing SMEs development and infrastructure development, would have shown SA is ready for business.
The ANC’s strategy of cadre deployment which ‘deploy’ ANC cadres to strategic positions in the public sector, state-owned entities and democratic oversight institutions, has caused the failure of these institutions, undermining economic growth. Cancelling cadre deployment would have boosted business confidence.
South Africa’s G20 presidency is one of the biggest missed opportunities, at a time when South Africa needs every lucky break to lift economic growth, attract investment, capital, and technology to create jobs, tackle poverty, and secure social peace.
William Gumede is Associate Professor, School of Governance, University of the Witwatersrand and author of Restless Nation: Making Sense of Troubled Times (Tafelberg)
This is an edited extract of a talk on how South Africa can maximise its G20 presidency at a workshop in Johannesburg organised by the Industrial Development Corporation, its Social Employment Fund initiative, the Presidential Employment Stimulus initiative and the Economic Development Partnership.