The G20 countries are aware that they have a special responsibility to work together to tackle the challenges facing the world’s poorest countries, especially in Africa. The Compact with Africa (CwA) is a central pillar of the G20-Africa partnership launched to this end under Germany’s G20 presidency. The aim of the CwA is to promote private sector-led development by improving the conditions for private investment, including in infrastructure.
The initiative, which has met with great interest in Africa, has established itself as a central multilateral initiative to promote private investment and as a format for dialogue on an equal footing between the G20 and African partners. Since its launch in 2017, 12 countries have joined the initiative: Benin, Burkina Faso, Côte d’Ivoire, Egypt, Ethiopia, Ghana, Guinea, Morocco, Rwanda, Senegal, Togo and Tunisia. These countries have taken advantage of the opportunities provided by the initiative to improve their economic competitiveness and the conditions for private investment. Their increased economic resilience has also helped the participating countries to better deal with the economic challenges of the Covid-19 pandemic.
The initiative has been firmly anchored in the G20 Finance Track via the Africa Advisory Group, which is co-chaired by Germany and South Africa. With the aim of further developing the CwA, in the autumn of 2021 all partners agreed on additional reform efforts to strengthen the initiative. Three international organisations (the World Bank Group, the African Development Bank and the International Monetary Fund) are now working to develop these measures and specify the details.
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 organisations and bilateral partners.
The CwA is demand-driven and open to all interested, reform-oriented African countries. 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.
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 makes 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.
The German government has actively supported the initiative right from the beginning, in particular via the development investment fund and by means of bilateral reform partnerships with the partner countries Côte d’Ivoire, Ethiopia, Ghana, Morocco, Senegal, Togo and Tunisia. In addition, the procedure for granting loan guarantees was simplified. The fourth Compact with Africa conference took place on 27 August 2021 at the invitation of then-Chancellor Angela Merkel. Invited participants included, in addition to the heads of state and government of the Compact countries, high-ranking representatives of the relevant international organisations (the World Bank Group, the African Development Bank and the International Monetary Fund) and of the European Union and African Union, as well as representatives of South Africa and Italy, which held the G20 presidency at the time. All relevant information is available on the Compact with Africa’s website, including reform commitments, support measures, monitoring reports and investor events.