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, G20 support for developing countries, particularly in Africa, is crucial. This is why the G20 launched its Partnership with Africa. The central pillar of the Partnership is the Compact with Africa (CwA), which was established within the G20 finance track and aims to promote private sector-led development and improve the investment environment. Since its launch in 2017, the CwA has sparked great interest. So far, eleven African countries have joined the initiative: Benin, Côte d’Ivoire, Egypt, Ethiopia, Ghana, Guinea, Morocco, Rwanda, Senegal, Togo and Tunisia.
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 Compact with Africa at a glance
Comprehensive – Aims to increase the attractiveness of private investment by improving the macro, business and financing frameworks in Compact Countries.
Coordinated – Brings together reform-minded African countries, international organisations and bilateral partners from the G20 and beyond to coordinate reform agendas and support measures and to raise private investors’ awareness of the CwA.
Country-specific - No one-size-fits-all approach, but demand-driven and tailor-made reform agendas and support measures jointly developed by Compact Countries, international organizations and bilateral partners.
How does the initiative work?
The CwA is demand-driven and open to all African countries. Participation in the initiative is based on self-selection. Success or failure depends on the implementation of reform measures. The driving force behind the CwA is African ownership, not Western prescriptions. The initiative serves as a commitment device not only for African countries but also for the G20 and international organisations, as it makes the shared responsibilities of all stakeholders transparent.
When reform-minded African countries join the CwA, they team up with international organisations (World Bank, International Monetary Fund, African Development Bank) and bilateral partners from the G20 and beyond to prepare comprehensive, coordinated, and country-specific reform agendas and support measures to promote private investment. These plans are called Investment Compacts. Representatives from all stakeholders meet regularly in Compact Teams that are established in each Compact Country. These teams are the central players in implementing the Investment Compacts. They help coordinate measures on the ground and serve as the main point of contact for investors.
As African countries implement their reform agendas, the G20 is making a special effort to bring international investors together with African countries. Its main role is to give visibility to the initiative by providing it with a political platform, coordinating support measures and publicising reform progress.
All relevant information on the Investment Compacts is publicly available on the Compact with Africa’s website, including reform commitments, support measures, monitoring reports and investor events.
Germany is contributing bilaterally through reform partnership agreements with Côte d’Ivoire, Ghana and Tunisia.
We see the Compact with Africa as a long-term, demand driven process. The African countries will determine what they want to do to improve conditions for private investment, with whom they want to cooperate, and in what form. Dr. Wolfgang Schäuble, former Federal Minister of Finance
G20 Africa-Conference in Berlin
On 12-13 June 2017 the international conference “G20 Africa Partnership - Investing in a Common Future” hosted by the German Federal Ministry of Finance, the Federal Ministry for Economic Cooperation and Development and the Deutsche Bundesbank took place in Berlin.
The conference provided a platform for government representatives as well as experts and private sector stakeholders to initiate the G20 Africa Partnership and to strengthen this dialogue by exchanging views on joint opportunities and measures to overcome challenges. Central to the discussions of the conference were the three pillars of the G20 Africa Partnership: (1) to improve inclusive economic growth and employment; (2) to develop quality infrastructure especially in the energy sector; and (3) to strengthen the framework for private finance and investment in Africa (Compact with Africa). The G20 Africa Partnership builds on existing regional and international strategies in order to ensure alignment, coherence and ownership; it is based on the assumption that peace and stability are prerequisites for sustainable growth and development. Participants in the conference expressed strong support for the G20 Africa Partnership and committed to actively support it.
The conference also provided a platform for the African countries that are participating in the G20 Compact with Africa initiative to emphasise their political commitment and priorities. The finance ministers of Côte d'Ivoire, Ethiopia, Ghana, Morocco, Rwanda, Senegal and Tunisia, announced ambitious reform measures aimed at improving the framework conditions for private investment. The heads of the African Development Bank, the International Monetary Fund, and the World Bank as well as many G20 members and non-G20 partners indicated their support for the initiative and the implementation of individual investment compacts. The participating international organisations committed to work closely together to ensure effective coordination of the input from all Compact partners.
During the high-level investor round table discussions as well as during the follow-up bilateral discussions with investors, the finance ministers of the Compact with Africa countries presented the first outlines of their compacts to private investors and also pointed to specific sectors and projects where private-sector participation is most needed in their countries. They used the opportunity to ask the invited private sector representatives for their feedback on the compact outlines (prospectuses).
Investors welcomed the Compact with Africa initiative and appreciated the opportunity to start a dialogue with the Compact countries. They highlighted the importance of good governance and mutual trust, good public infrastructure, access to decision-makers, transparency of decision-making, skills and training, well-functioning domestic capital markets, transparent and reliable regulation and taxation as well as minimal red tape, which are all crucial for private investors. Several business representatives indicated their interest in investing in specific countries and sectors.
Others highlighted their presence in the Compact countries and the extent of their operations. The representatives from the development finance institutions also highlighted their commitment to the initiative and specified potential contributions, ranging from technical assistance to developing innovative products that will help to crowd-in private capital.
G20 Finance Track Documents