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Tuesday, 29 September 2009 12:48

Can G-20 Really Succeed Where G-8 Failed?

By Kester Kenn Klomegah

MOSCOW, Russia, Sept 28 (Buziness Africa) – South Africa has not been as vociferous or vigorous as one would expect on reforming the International Monetary Fund (IMF) to give African countries a bigger say and end the imposition of damaging conditionalities, Sarah Gillam, International Head of Media and Image for ActionAid, told Buziness Africa in an interview from London.

 

As leaders leaving Pittsburgh hail a new era of global economic cooperation, ActionAid charges that the G20 needs to do much more to address the impacts of the continuing financial and economic crisis in developing countries.

 

The anti-poverty agency says that the G20 should seek a broader political mandate to become the major coordination point for the global economy, but in the meantime its leaders must take imaginative steps to stop the financial crisis from hurting even more of the world’s poorest people.

 

Speaking in response to a few questions from APA, Gillam said that “the G20 is not much more representative than the G8 and they have done next to nothing for least developed countries in their two big summits to date, other than the highly questionable favour of increasing IMF resources (most of which will benefit MICs anyway).”

 

Despite rhetoric on abstaining from protectionism, G20 members have recently introduced a raft of protectionist measures to bolster their own industries, many of which are harmful to low income countries – this includes South Africa, she further explained. South Africa is only African country included in the G20.

 

“For all of the reasons above and more, we believe that a Global Economic Council under the UN, as recommended by the Stiglitz Commission, would be far effective in representing the interests of African countries than a self-selected club of high and middle income countries,” Gillam said before adding that “in the meantime, because there is a lot of resistance towards truly democratic oversight of the global economy, South Africa has a lot to prove if it wants to be seen as Africa ’s representative on the G20.”

 

It could start, for instance, by pushing for the establishment of a genuinely representative Global Economic Council at the UN, Gillam strongly suggested.

 

In their end of meeting statement, the heads of the world’s biggest economies also vowed to reform banking sectors and raise capital standards, replace the G8 with the G20 as the primary forum for international economic diplomacy, endorse a World Bank-led food security initiative for the world’s poorest countries, and commit to phasing out fossil fuel subsidies.

         

Catching most observers by surprise was the announcement that the G8 would now be supplanted by the G20, a more representative body of the world’s most powerful countries but a far cry from the inclusive global governance called for by the world’s poorest countries and development NGOs.

 

The G8 comprises Canada, France, Germany, Italy, Japan, Britain, Russia and the United States. The G20 adds Argentina, Australia, Brazil, China, India, Indonesia, Mexico, Saudi Arabia, South Africa, South Korea, Turkey and the European Union.

 

The G8 has transformed into G20, thus allowing South Africa to become the only voice for Africa. With the inclusion of South Africa, whether the G20 can succeed where the G8 failed in its commitments to Africa’s development has raised some arguments from some economic analysts.

 

Bright Simons, economic researcher at the Accra-based Imani Centre for Education and Policy, a non-governmental think tank, told Buziness Africa in an interview that the G8/G20 model is reliant on the membership of what is termed “systemically significant” countries. Clearly the notion of “systemic significance” if it is to have any meaning at all must incorporate a broad range of indicators.

                                                                                                            

“If the consideration is confined to GDP then of course South Africa is the only player in Africa with a credible voice in the global economic system. But we have increasingly seen energy security, maritime integrity, migration (the trade in labour as compared to goods), other population demographics and related issues interweaving to shape the fate of the 21st century economy,” he further explained.

 

In that sense, leaving out Nigeria and Egypt, to cite two qualified African countries, from the framework betrays a lack of full understanding of the emerging structure of global interdependence. Africa must underemphasise these grand frameworks and focus on improving economic cooperation across its fragmented markets, Simon added.

 

Some of the former G8 members, especially Russia also a BRIC member, is not helping Africa enough with its economic development, the expert said. 

 

“Decades of relying on the multilateral system to fix Africa’s woes have left the continent in worse shape than in the 1960s, the independence era. Unless Africa works to enhance its own capacity to cooperate, its relationships with more developed countries shall continue to be exploitative, or at best marginal,” according to Simon.

 

Speaking in contribution from Pittsburgh, ActionAid’s Development Finance Expert Soren Ambrose said: “The leaders here represent the world’s economic powerhouses and they have the opportunity to adopt some innovative ways of raising significant funds for developing countries.

 

“ActionAid would like to see the introduction of a broad-based global tax on financial transactions, as proposed by the Germans and the French, and that could raise billions. We’d like to see genuine cooperation among global tax authorities to stop the haemorrhaging of corporate earnings and also more targeted allocations of the IMF’s special currency, its special drawing rights,” Ambrose stressed.

 

ActionAid, however, believes any solution to the crisis should be approached transparently and openly taking into account all economies, including the poorest. With rebalancing the global economy high on the agenda, ActionAid says the most serious economic imbalance of all is the growing gap between rich and poor and expresses dismay that their needs are being ignored.

 

Ambrose continued: “The biggest imbalance of all is the grotesque and ever growing inequality between rich and poor. As they discuss how to balance the world economy, G20 leaders must not forget this. Until we see delivery, any promises made over the last 24 hours will be meaningless. Pledges alone will not put a single child back in school nor create a single job. Neither will they help towards cooling the planet. Action is what counts.”

 

ActionAid also has expressed deep concerns that many millions of people are not represented at the G20. Whilst ActionAid acknowledges that the G20 is better than the G8, it points out that the G20 remains self-selected and is not accountable.

 

“It’s an issue of democracy,” Soren Ambrose assertively said, and finally concluded that “the G20 is not a mini-UN. The G77, on behalf of developing countries, has already proposed a fully-represented body, a Global Economic Coordination Council, based at the UN and on a par with the Security Council. This idea should not be hijacked. If they wish for solutions to the crisis to have any legitimacy, the G20 must work transparently and openly with all the world’s countries.”

 

 
AfricnGrowthWorldSafaris_

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