SA’s G20 presidency seeks to boost developing countries

South Africa has unveiled a bold agenda for its Group of 20 (G20) presidency over the coming year, which includes a strong push for debt reform that will see low-income and developing countries provided with cheap money for their development ambitions.

It is the first time an African country will lead the 20-year-old G20, which includes most of the world’s major economies responsible for 80% of the world’s economic output. These include, among others, the US, China, Russia, Ukraine, France and Canada.

The country’s G20 presidency started on Sunday, 1 December 2024 and will run for 12 months.

South Africa has an opportunity to influence discussions on the global economy and foreign policy before the G20 presidency is handed over to the US and its president-elect, Donald Trump.

G20 meetings began in Johannesburg on Monday, 9 December with South African government officials unveiling that the focus over the coming year will be particularly on Africa’s needs, and ensuring that multilateral development banks provide cheap finance to developing countries.

Unlike commercial banks, multilateral development banks offer concessional funding with low interest rates (less than 3%) and longer repayment schedules that can fund initiatives aimed at reducing hunger, poverty and inequality levels.

Multilateral development banks such as the World Bank, European Investment Bank, Asian Development Bank and other funding institutions such as the International Monetary Fund (IMF) have come under fire over the past two decades for their lending practices towards low-income and developing countries, especially in Africa. 

In particular, government officials and private-sector players have accused the IMF of predatory lending practices that saddle poor African countries with smothering debt that is expensive in the long term. This weakens their public finances and ability to fund service delivery programmes.

Implementing debt reform measures

The last two countries that had the G20 presidency, India and Brazil, also pushed for multilateral development banks to provide cheap finance to developing countries, but their efforts did not yield much progress. Under Brazil’s presidency, the G20 agreed on a “road map towards better, bigger and more efficient multilateral development banks”.

Finance Minister Enoch Godongwana said South Africa’s G20 presidency would focus on implementing and monitoring the framework laid by Brazil. He said officials planned in the coming year to come up with practical measures to tackle the debt trap many low-income countries face.

He was speaking in Johannesburg on Wednesday, 11 December at a forum for G20 finance ministers and central bank governors (known as the finance track), which served as a preparatory meeting for an official summit in Cape Town in February 2025.

Financing for poor countries is expected to be the key global agenda for 2025. It is set to feature not only at the official G20 summit in Cape Town, but also at the fifth Finance in Common summit (also in Cape Town) and the UN’s fourth International Conference on Financing for Development in Spain in June and July.

Poverty and weak economic growth remain a challenge for many countries, especially in Africa and the developing world. Thus, the themes of our temporary task forces focus on these matters

Minister of International Relations and Cooperation Ronald Lamola, who set out South Africa’s aims for its G20 presidency, said the developing world needed the assistance of multilateral institutions, particularly those with a development mandate, more than ever.

“The multilateral institutions with economic and developmental mandates must be strengthened, as the need for their intervention is even much bigger now. We all know that many countries, especially the developing world, are still recovering from the economic shock of Covid-19.

“Poverty and weak economic growth remain a challenge for many countries, especially in Africa and the developing world. Thus, the themes of our temporary task forces focus on these matters,” Lamola said.

Godongwana and Lamola said if multilateral development banks scaled up their funding, it would help African countries to rely less on expensive market funding that causes debt distress.

“The difficulty at the moment is that the multilateral development banks themselves have got to scale up the borrowing on a concessional basis – that’s the key thing that has got to happen so that you are able to deal with other bondholders,” Godongwana said.

More G20 priorities

Other focus areas for South Africa during its G20 presidency will include measures for inclusive economic growth and development, governance of artificial intelligence, strengthening the global response to natural disasters and finance for the just energy transition. On climate financing, South Africa has received more than $11-billion of concessional financing (with low interest rates) from multilateral development banks since 2020.

A big concern at the G20 meetings was the prospective Trump presidency and whether he plans to continue the US’s climate finance programme for developing countries and free trade agreements.

Trump has already warned of imposing 100% tariffs on BRICS countries (Brazil, Russia, India, China, South Africa and others that recently joined the bloc) if they abandon the US dollar as the currency for trade (de-dollarisation).

Godongwana has again responded to Trump’s threat. “There’s never been a debate about de-dollarisation in the G20, there’s never been a debate about de-dollarisation in BRICS,” he said, adding that the dollar and other currencies are entrenched in South Africa’s public finances.

For example, about 10.3% (or R577.2-billion) of the government’s gross debt of R5.6-trillion in the 2024/25 fiscal year is denominated in foreign currencies (including the dollar), according to the latest Medium-Term Budget Policy Statement. DM

This story first appeared in our weekly Daily Maverick 168 newspaper, which is available countrywide for R35.