The G20 Compact with Africa is unsuitable for African low-income countries

Intensifying the partnership with Africa is one of the priorities set out for the G20 Summit opening in Hamburg early in July. “Compact with Africa” (CWA), an initiative envisioned by the G20 within its finance track to achieve this priority, is unsuitable for low-income countries where priorities remain rising unemployment, poverty, and social inequality.

This is the main argument authors and economists Robert Kappel and Helmut Reisen put forward in The G20 “Compact with Africa” – Unsuitable for African low-income Countries, a discussion paper published by Friedrich-Ebert-Stiftung (FES) in June. 

“The CWA’s macroeconomic measures have an orthodox agenda, with a set of well-know (neoliberal) recommendations,” write the authors in the discussion paper. “Fiscal discipline, redirecting public expenditures, tax reform, financial liberalization,” the authors explain, as well as “elimination of barriers to foreign direct investment, privatization of state-owned enterprises, deregulation of market entry and competition, and secure property rights,” doesn’t tackle the lack of jobs, poverty, insufficiently integrated economies and low levels of industrialization, the main challenges for most of countries on the continent.

Drawing on a critical discussion of the proposed CWA framework, Kappel and Reisen present policy conclusions and prerequisites to the reforms and foreign private sector contribution proposed by the G20.

Read more and download the paper here.