Article

Wrong G20 theme, South Africa

JOHANNESBURG, SOUTH AFRICA

DURING his special address at the World Economic Forum (WEF) in Davos, Switzerland, two weeks ago, President Cyril Ramaphosa called for a global pursuit for “equality”.

I was not surprised to hear Ramaphosa advocating for “equality”. He’s a long-time supporter of “equality”. The “equality of outcomes”, not the “equality of opportunity” which is what I believe should be pursued by nations worldwide.

Ramaphosa’s political party, the African National Congress (ANC), champions “equality” wherever it goes.

In his address, President Ramaphosa outlined South Africa’s priorities and objectives for the G20 summit to be held in Johannesburg in November this year.

This year, South Africa is presiding over the G20. “G20 brings together the world’s major and systemically important economies. Its members represent 85% of global GDP, 75% of international trade and around 80% of the world’s population.”, according to the Australian department of foreign affairs.

This is the first time an African country presides over G20. My hope is that this year’s G20 summit becomes a success.

However, I’m not happy with the summit’s theme. The theme of “Solidarity, Equality, Sustainability”, is misguided, given the poverty challenges the world faces. Especially, the poverty challenges faced by the African continent. The world’s biggest challenge is poverty.

The fight against poverty should have been the theme

The theme was supposed to be centred around global poverty challenges. On the G20 website about this year’s theme, there’s no mention of poverty. All that’s discussed are “social justice”, “environmental protection”, “systemic disparities”, “social inclusion”. These are things relevant to developed countries, not to developing nations whose challenge is extreme poverty.

The African continent is the poorest in the world. The continent’s levels of poverty are disturbing.

In one of its cover stories a few weeks ago, titled “The Capitalist Revolution Africa Needs” The Economist magazine wrote, “By 2030 Africans will make up over 80% of the world’s poor.” This is higher than today’s percentage of roughly 60% of the world’s poor. Concerning!

Western nations can debate the topics of “social justice”, as they are already developed nations. They do have that luxury. In Africa, the problem is not “systemic disparities”; it’s destitution. It’s not like our continent has too many greedy rich people. Africa’s economic output is very low. The continent’s contribution to global GDP is the lowest; it’s only 3%. The poorest country in the world is in Africa; it’s Burundi with the GDP per capita of approximately $200.

This year’s G20 summit was supposed to be about how to increase and expand economic output in developing nations. Differences in economic productivity are at the root of inequality between nations. The imbalances in economic productivity amongst nations are real but can’t be addressed by welfare from foreign nations.

Africans need long-term solutions that fuel economic productivity. Africa is in desperate need of rapid economic development. This economic development can only happen with stronger investment and good governance.

Public policy to uplift developing nations must be focused on matters that will bring tangible positive changes in peoples’ lives. And with increased economic output, Africa will be able to sustain itself, with zero reliance on foreign aid.

Addressing lack of rapid economic development is in the interest of developed nations as well. Thousands of Africans flee their dysfunctional, repressive, violent countries, to Western countries. Many of them enter illegally. Some Africans have died en route to Western countries.

Structural change is critical for Africa’s progress. Leadership plays the most important role in effecting structural change. The efforts to redistribute wealth globally will be no solution. It will suppress wealth creation and destroy incentives.

African countries face enormous fiscal challenges. The sky-high government debt is harming African economies. Africa’s biggest creditor is China.

The continent’s payments of interest on debt have increased by 132% in the last ten years. Many African countries are now spending more on debt service costs than on healthcare and education.

The government debt imposes strain on African nations and addressing this problem requires a long-term strategy. It is those long-term strategies that are supposed be discussed at this year’s G20 summit. There cannot be a shortcut.

It’s bad government policy that has caused an increase in government debt.

At the root cause of these staggering levels of debt, is failure by African leaders to reform economies to become more productive and investable.

Stronger productivity is what will help with the stabilisation of government finances in Africa, and therefore avoid the increase in government debt.

Discussions of the 21st century need to be approached with a sense of urgency and should focus on the fundamental challenges the world’s poor people face. What a missed opportunity by South Africa G20 presidency! PM

This article was first published on Politicsweb.co.za. Buy Phumlani’s book Lessons from Past Heroes here, and subscribe to his YouTube channel here.

© PHUMLANI M. MAJOZI