seizing the G20 legacy for African prosperity

For the first time, our continent’s most pressing and often controversial development issues were not relegated to the sidelines but placed squarely at the heart of the agenda of the G20 group of nations. This diplomatic victory is, however, merely a prelude. The true legacy of this G20 Presidency will be determined not in meeting rooms, but by the actions we, as African policymakers, take in its wake. The global platform has been secured; now, we must build our continental future upon it.

The G20 dialogue successfully amplified three systemic challenges that have long constrained Africa’s economic potential:

The discussions moved beyond acknowledging the problem to outlining a potential solution. Illicit financial flows (IFFs) are a persistent drain on our economies, siphoning away an estimated $88.6bn annually – a figure that far surpasses the official development assistance we receive. 

This haemorrhage cripples our ability to mobilise domestic resources for critical investments in health, education and infrastructure. The G20 consensus on the need for transparency in identifying the beneficial owners of shell companies, strengthening tax administration capacities and implementing a global minimum corporate tax rate of at least 15% is a significant step forward. This global framework provides us with powerful tools. Our task now is to aggressively domesticate and enforce these measures, closing the loopholes that allow for profit shifting and base erosion. This requires not just new laws, but a fundamental strengthening of our institutions, investing in skilled revenue authorities and fostering cross-border judicial cooperation to track and repatriate stolen assets.

Punitive cost of capital

The deliberations brought into sharp focus the existential threat posed by the high cost of capital. About 20 African countries are either in debt distress or at high risk. This is fundamentally driven by a profound mispricing of risk by international financial markets. 

A perception of high political risk, weak institutions and economic volatility leads to crippling risk premiums and lending rates that are often multiples of those offered to developed economies. 

While financial instruments such as blended financing and partial credit guarantees can offer temporary relief by de-risking investments, they are a palliative, not a cure. 

The permanent solution lies in a concerted, continent-wide confidence-building campaign. This necessitates enhancing data transparency – ensuring accurate, timely and accessible economic data is available to investors. More critically, it demands an unwavering commitment to strengthening our macroeconomic fundamentals: controlling inflation, managing public debt and maintaining flexible exchange rates. By presenting a unified front of macroeconomic stability, we can systematically dismantle the prejudices that inflate our borrowing costs.

Climate threat

Extreme weather events, from prolonged droughts in the Horn of Africa to devastating floods in West Africa, have a direct and immediate impact on agricultural output. Given that food items account for over 40% of the consumer price index in many of our countries, a failed harvest in one region can trigger inflationary waves across the continent, eroding purchasing power and threatening social stability. The G20’s focus on global action is welcome, but it cannot be our primary line of defence. We must build our own resilience by diversifying our agricultural base, investing in climate-smart agriculture and developing robust early warning systems. Our national and regional strategies must explicitly mainstream climate adaptation to safeguard food security and macroeconomic stability.

The illusion of calm

African GDP growth is projected at 3.3% in 2024 and between 3.5% and 4.1% in 2025. Inflation is expected to moderate from 20.1% to 13.8%. This may be the calm before the storm. The resurgence of protectionist policies and escalating tariffs, coupled with steep declines in Official Development Assistance (ODA), pose a direct threat to our recovery.

Rising tariffs will deteriorate our trade balances, elevate fiscal pressures and exacerbate already high debt vulnerabilities. Sub-Saharan Africa’s international reserves as a percentage of external debt stocks stood at a precarious 20% in 2023, down from 26% in 2018 and a stark contrast to 151% in 2017. This leaves us dangerously exposed to external shocks. The era of relying on external saviours is over. We have little choice but to look inward for development financing and strategically position ourselves as preferred investment destinations.

A four-point plan

The path forward requires a deliberate and unified shift from rhetoric to implementation. We propose a concrete four-point action plan:

Accelerate the AfCFTA from a framework to a tangible reality: The African Continental Free Trade Area (AfCFTA) represents a $3.4 trillion economic opportunity. To move from promise to prosperity, we must:

Front-load infrastructure investment: The estimated need for $120.83bn in transport equipment by 2030 underscores the scale of the challenge. We must prioritise regional infrastructure projects. This requires leveraging public-private partnerships and directing pension funds and sovereign wealth funds towards infrastructure bonds.

Harmonise relentlessly: The real barriers to trade are often not tariffs, but divergent standards and regulatory regimes. We must accelerate the work of the AfCFTA Secretariat to harmonise product standards, sanitary and phytosanitary measures and customs procedures.

Advocate for coherent external engagement: We must proactively urge our G20 partners, including the United States and the European Union , to align their bilateral trade agreements with AfCFTA’s Rules of Origin and tariff schedules. This will reduce complexity and compliance costs for our exporters, allowing them to tap into both continental and global markets.

Our continued reliance on the export of raw commodities leaves us vulnerable to volatile global prices. The strategic imperative is to develop robust regional value chains in key sectors such as agro-processing, automotive, pharmaceuticals and renewable energy. By doing so, we capture more of the value created on our own soil, create higher-skilled jobs and reduce our susceptibility to external shocks.

Digital trade now accounts for 25% of global trade, yet Africa lags catastrophically behind, with only 37% of our population connected to the internet. Investments in digital infrastructure – such as data centres, internet exchange points and fibre-optic cabling – are as critical as investments in roads and ports.

Mobilise African capital through African institutions.

The decline of Foreign Direct Investment (FDI) from $63bn in 2021 to $30bn in 2023 highlights the urgent need to catalyse internal capital. The initiatives led by AUDA-NEPAD are precisely what the moment demands. The operationalisation of the African Union Development Fund and the collaborative platform of the African Alliance of Multilateral Financial Institutions (AAMFI) are designed to de-risk and finance priority projects at a continental scale. We must now ensure these institutions are capitalised, professionally managed and empowered to become the primary vehicles for crowding in investments into energy, transport and telecommunications – the very sectors that will expedite the AfCFTA’s success.

The G20 provided the stage and the microphone. We used it to articulate our challenges with clarity and conviction. The world is listening. Now, we must command the stage of our own continent. The way forward is not one of passive hope but of active, collaborative and implementation, sometimes difficult. It requires political will to push through regional integration, fiscal discipline to strengthen our fundamentals, and a visionary commitment to investing in our own future.

By executing this agenda with determination, we will do more than spur economic growth; we will systematically rebrand Africa from a high-risk destination to the world’s next premier investment frontier. The legacy of the G20 is in our hands. Let us build a future of prosperity, resilience and self-reliant strength. The time for decisive action is now.