G20 Turns Its Focus Onto Africa

In July 2017, the Group of 20 (G20) launched the Compact with Africa (CWA), an initiative that aims to catalyze private investments in infrastructure. The CWA is designed as a tailorable initiative that lets participant countries set their objectives and select implementing measures and instruments. As such, it emphasizes “country ownership,” the core tenet of international development. But the CWA targets the African countries most willing and able to reform their investment frameworks. This shift from a universal to an “avant-garde” approach marks a consequential departure from the conventional practices of multilateral institutions.

What next

In the next months, the African Development Bank (AfDB), the IMF, and the World Bank will help participating countries prepare and implement individual Investment Compacts. With strong external support, the Compacts will send the potent signal to private investors that governments have the will and the means to reform their investment frameworks. The impact of CWA will, for the most part, depend on whether the initiative remains at the top of the G20 agenda beyond the current German presidency (high probability) and, especially, on whether the successive governments in participating countries maintain their predecessors’ commitment to the Compacts (lower probability).


  • The Compacts will increase foreign investments into participating African countries, especially in the infrastructure sector;
  • In most countries, the influx of private financing for infrastructure is likely to complement – and not substitute – public financing;
  • The Compact for Africa may mark an expansion of the G20’s sphere of responsibility, at the expense of the G7.


The CWA aims to catalyze foreign and domestic private investment and promote the efficient use of public funds with a focus on the infrastructure sector.

It consists of country-specific Investment Compacts, or reform plans, to which interested African governments voluntary commit. The Compacts will list packages of actions and, possibly, bankable projects. They are prepared by the participating countries in collaboration with International Financial Institutions (IFIs), G20 donors, and other interested partners.

The Compacts comprise three main areas of reform:

  • The macroeconomic framework covers debt sustainability, domestic revenue mobilization, public investment management, and public utilities;
  • The business framework covers institutions and sector regulations, investor protection, project preparation, and contract standardization;
  • The financing framework covers risk mitigation, domestic debt markets, and innovative instruments for institutional investors.

Eight recipient countries are now participating in the CWA: Côte d’Ivoire, Egypt, Ethiopia, Ghana, Morocco, Rwanda, Senegal and Tunisia. Among the participants, all but Egypt have outlined their priorities for reform in Compact Prospectuses. They were presented to international investors on June 13, 2017, during a pre-summit G20 conference on African development.

The CWA forms the core of a broader “G20 Africa Partnership” that includes existing and new initiatives that support renewable energy, energy efficiency, rural employment, digital educations for girls, improved taxation and food security on the continent.


The CWA is the first major G20 initiative focused on development issues in Africa, an area that has traditionally fallen within the remit of the G7. The emergence of this item onto the G20 agenda, where it has featured prominently, is explained by Germany’s own agenda for Africa as well as by the growing clout of emerging G20 donors.

Germany’s own priorities for bilateral and European cooperation with Africa are expressed in the recent Marshall Plan for Africa, itself partly reflected in the forthcoming EU External Investment Plan. The CWA platform will increase the legitimacy and facilitate the implementation of these strategies.

The emerging market economies that are members of the G20 represent a significant and growing share of development finance – just as companies based in these countries represent a large and rising share of foreign investments into Africa. Mobilizing the political support, if not the financial resources, of emerging “non-traditional” donors via the G20 forum was a prerequisite for the CWA to be effective.


CWA is part of the “G20 Finance Track,” where a reporting structure will be set up. However, the G20 will provide little more than a high-level political platform to create and sustain the momentum for reform. The AfDB, IMF, and World Bank Group will be the main points of contact during the preparation and implementation of the Compacts, which will be developed on the basis of a catalog of possible measures and instruments outlined in an ad hoc joint report prepared by the three IFIs.

The IFIs will provide financial and technical assistance to the participating governments by way of existing initiatives and instruments as provided by their respective mandates and in the limit of their respective financing envelopes for the countries involved. G20 members can also contribute to the implementation of the Compacts with domestic policy measures, some of which are also presented in the report, and via bilateral channels of cooperation and other platforms such as the “Forum of China Africa Cooperation” and “the Tokyo International Conference on African Development.” For instance, on the sideline of the June 2017 conference, Germany committed €300 million in bilateral funds for business development in Côte d’Ivoire, Ghana, and Tunisia.

Other relevant parties such as the New Partnership for Africa’s Development Agency and the OECD have also been invited to provide support.

The contributions from multilateral and bilateral partners will be coordinated in each participating country by ad hoc Country Teams, which will comprise representatives of government, IFIs, interested G20 countries, and other partners.


Although the CWA is a high-level platform that rests on existing institutions and financing channels, it will add to a web of more than 100 recent multilateral and bilateral initiatives that also aim to facilitate private investments in Africa. Like other programs, the CWA will represent a minor cost to participating countries by diverting administration and donor resources. In particular, the use of IFI resources to achieve Compacts’ objectives is likely to come at the expense of other IFI operations in these countries. The initiative will also duplicate similar structures and processes. For instance, the Country Team will replicate existing donor cooperation groups, most of which are organized by themes or sectors.

The CWA is however expected to have a small, but overall positive impact, mostly by signaling to private investors that the commitment of participating countries to reform is genuine and durable. Indeed, the CWA’s added value resides in the high level of country ownership. The reform priorities are set by participating governments, who commit to specific objectives, and select a package of actions to attain them. The actionability and publicity of the Compacts will guarantee the commitment of governments to the agreed roadmap. In addition, the unity of the donor community and the visibility of external support will increase the political feasibility of implementing the Compacts.

Most actions under the CWA require implementation over the medium to long term. In the end, the success of the initiative will therefore depend on the sustained commitment of successive governments in participating countries and in G20 members.


This is an electronic, unedited version of an article published in the Oxford Analytica Daily Brief



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