Realizing the Potential of the G20 Compact with Africa

IMF Blog, October 30, 2018

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Realizing the Potential of the G20 Compact with Africa

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Bibliographic details

• Authors: Christine Lagarde
• Published: October 30, 2018

Overview

• Author: Christine Lagarde
• Date: October 30, 2018
• Purpose: Explain the Compact with Africa initiative and outline what is needed to accelerate private sector investment and job creation in Compact countries.
• Notable descriptive points from the page:
  • "So far, eleven African countries have joined the initiative: Benin, Côte d’Ivoire, Egypt, Ethiopia, Ghana, Guinea, Morocco, Rwanda, Senegal, Togo and Tunisia."
  • "Sixteen months on from the Berlin Summit that effectively launched the initiative..."
  • A "2 minute" video about the Compact with Africa is available on the page.

Economic stability and fiscal constraints

• Findings:
  • "Compact countries have been implementing policies to strengthen economic stability—a fundamental pillar for attracting private investment."
  • Growth prospects for most Compact countries are described as "favorable."
  • Specific countries noted with constrained fiscal space: "Egypt, Ethiopia, and Ghana."
• Policy implications:
  • With limited room for additional borrowing, countries need to:
  • "boost domestic tax revenues"
  • "increase the efficiency of public spending to fund higher public investment"
  • Success requires coordination: "reform-minded countries in Africa, international organizations, and G20 partners need to row together."

Business and financing frameworks

• Findings:
  • Private investors seek: "streamlined procedures, regulatory certainty, efficient courts, and transparency."
  • "Stronger and more developed financial sectors deepen capital markets and expand access to credit."
  • Coordination between governments and partners has been "highly effective in some countries, such as Ghana and Morocco—but less so in others."
• Role of development partners:
  • Need to provide "fine-tuned public support—such as risk mitigation instruments—to leverage private sector investment."
  • "The growing involvement of development finance institutions in G20 countries is welcome."
  • Development finance institutions "can contribute extensive expertise in the design and financing of large investment projects."
• Implementation requirements:
  • Implementing "ambitious and country-specific reform commitments under the Compact requires strong ownership by African countries, and stepped-up engagement and support from Compact partners to ensure adequate capacity and financing during implementation."

Stepping up to attract more private investment

• Actions highlighted:
  • "Attracting private investment requires connecting countries directly with private investors"
  • Example given: the "Germany-Ghana Investors 'Virtual' Forum."
  • Recommendation for G20 partners: "step up their game in this area, including through funding of road shows and peer-learning events that bring together Compact countries and potential investors."
• Realism and timing:
  • Reforms "take time and require strong ownership."
  • Must be "realistic about how quickly projects can be developed and implemented, and about the challenge of overcoming political opposition in some cases."
  • Nonetheless, "the potential rewards of meaningful economic reforms are worth the wait."

IMF support and capacity development

• IMF engagement:
  • "The IMF continues to work closely with Compact countries to build strong macroeconomic, business, and financial frameworks that will encourage a scaling-up of private investment."
  • "We maintain a close policy dialogue with all 12 Compact countries, and IMF-supported programs are in place in 10 of those countries."
• Capacity development delivered (2017–2018):
  • "the Fund fielded 129 technical assistance missions in Compact countries"
  • "trained more than 1,700 government officials"
  • Training areas included: "tax administration, public investment management capacity, and financial sector supervision."

Demographic and long-term stakes

• Key projection:
  • "In the next decade, 140 million children will come of age in the 12 Compact countries."
• Imperative:
  • Increasing private investment is framed as essential for enabling those young people to "enter productive employment, and thereby deliver on Africa’s demographic dividend."
  • "Failure to meet this job creation challenge is not an option—and we have the tools and instruments to achieve success."

Concluding message

• The Compact is characterized as a "pragmatic 'win-win' collaboration between advanced and developing countries."
• Final call to action: "To deliver on its full potential, reform-minded countries in Africa, international organizations, and G20 partners need to row together."
• Closing emphasis: "We must steer, not drift."

Christine Lagarde, October 30, 2018 — IMF blog post.

Content in this bundle

• 发挥二十国集团“非洲契约”的潜力； IMF博客； 2018年10月30日
  • 发挥二十国集团“非洲契约”的潜力； IMF博客； 2018年10月30日 (Markdown version)
  • 发挥二十国集团“非洲契约”的潜力； IMF博客； 2018年10月30日 (PDF)
• G20「アフリカとのコンパクト」の可能性を引き出すために; クリスティーヌ・ラガルド著　IMFブログ　2018年10月30日
  • G20「アフリカとのコンパクト」の可能性を引き出すために; クリスティーヌ・ラガルド著　IMFブログ　2018年10月30日 (Markdown version)
  • G20「アフリカとのコンパクト」の可能性を引き出すために; クリスティーヌ・ラガルド著　IMFブログ　2018年10月30日 (PDF)
• Реализация потенциала Соглашения Группы 20-ти с Африкой; Кристин Лагард; 30 октября 2018 года
  • Реализация потенциала Соглашения Группы 20-ти с Африкой; Кристин Лагард; 30 октября 2018 года (Markdown version)
  • Реализация потенциала Соглашения Группы 20-ти с Африкой; Кристин Лагард; 30 октября 2018 года (PDF)

References

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• https://www.imf.org/wp-content/uploads/2018/10/BLOG-1024x600-CWA-power-plant-Abidjan-CotedIvoire-Thierry-Gouegnon-Reuters-Newscom-rtrlfive308770.jpg