G20 Compact with Africa
The G20 Compact with Africa (CwA) was initiated under the German G20 Presidency to promote private investment in Africa, including in infrastructure. The CwA’s primary objective is to increase attractiveness of private investment through substantial improvements of the macro, business and financing frameworks. It brings together reform-minded African countries, international organizations and bilateral partners from G20 and beyond to coordinate country-specific reform agendas, support respective policy measures and advertise investment opportunities to private investors. The initiative is demand-driven and open to all African countries. Since its launch in 2017, the CwA has sparked great interest. So far, twelve African countries have joined the initiative: Benin, Burkina Faso, Côte d’Ivoire, Egypt, Ethiopia, Ghana, Guinea, Morocco, Rwanda, Senegal, Togo and Tunisia.
About
In an interconnected world, the G20 must look beyond its membership to achieve its objectives of fostering sustainable economic growth and stability worldwide. To this end, engagement of the G20 in supporting developing countries, particularly in Africa, is crucial. That is why the G20 launched its Partnership with Africa. The central pillar of the Partnership is the Compact with Africa (CwA), established within the G20 finance track, to promote private sector-led development and improve the investment environment. This initiative is aimed to be coherent with and complementary to other initiatives to advance private investment, to increase employment and foster sustainable growth in Africa. With the establishment of the Africa Advisory Group (AAG) as a regular G20 working group, the initiative has been firmly anchored in the G20 finance track. It is currently co-chaired by Germany and South Africa.
The Idea
African countries, with the support of development partners and international organizations (IOs), have been working for many years to tackle impediments to private investment across the continent—at the national, regional, and pan-African levels. Much knowledge has been accumulated in this process on the wide range of issues that need to be addressed to boost investment levels. The CwA initiative is based on the premise that significant progress can be achieved through a coordinated and country-specific analysis of the obstacles and market failures impeding private investment in African economies. It brings together the analytical perspectives of governments, would-be investors, and IOs with extensive operational experience in Africa and deals with concrete situations rather than generic cases. This analysis allows identifying key policy actions that can be taken by the various public sector actors, backed by a joint commitment of both African countries and development partners to implement these reforms. These actions form the basis for Compacts between interested African countries and partner countries from the G20 and beyond, with the expectation that implementation of a coherent set of measures provides a powerful signal, leading to a change in risk-adjusted expected returns for investors and an ensuing surge in investment, in particular from private sources. The driving force behind the Compact is African ownership, not Western prescription. But it is not only a commitment device for African countries, but also for G20 and IOs, making shared responsibilities of all stakeholders transparent.
