African Union at the G20 High Table: Implications for the Future of Economic Governance

This article is a part of the series - Raisina Chronicles 2024

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The Raisina Dialogue has provided an invaluable platform for global thought leaders to deliberate upon and propose solutions to common challenges, furthering cooperation on complex, evolving economic governance issues. For most of the Global South, this ambition is reflective of India’s demonstrated commitment to advance pluralism and advocate for the interests of the South within global multilateral forums. As exemplified by its support for the admission of the African Union into the G20 during its presidency, India has sought to amplify the voices of emerging economies and promote inclusivity in global economic governance.

The Raisina Dialogue has provided an invaluable platform for global thought leaders to deliberate upon and propose solutions to common challenges, furthering cooperation on complex, evolving economic governance issues.

In the face of increasing fragilities in the global ecosystem, India has remained resolute in its rejection of deglobalisation, instead advocating for inclusion and cooperation for collective problem solving. Most significantly, while India’s profile and influence globally is rising, it has remained unapologetic about being a democracy in a moment where the global narrative is that democracy is impractical for developing countries. It has also stood against open attempts by a few nations to denigrate democratic institutions and to make African countries cynical of democracy. India has continued to give legitimacy to democracy and to promote democratic ideals as the sustainable path to development, despite the current global challenges.

Before the admission of the African Union (AU), the Group of 20 (G20) was an influential coalition of 19 sovereign countries and the European Union (EU). Since its formation in 1999, the G20 has focused on providing a forum that pursues consensus among influential economic actors to achieve better global economic governance. The rationale for this form of cross-country cooperation was emphasised in the New Delhi Leaders’ Declaration,1 which was adopted on 8 September 2023 during the G20 New Delhi Summit. It stated that, “G20 cooperation is essential in determining the course that the world takes.”

For a coalition of sovereign nations and the EU, the absence of Sub-Saharan Africa was conspicuous; this was corrected by the invitation to the AU to represent the continent of Africa in the G20. The World Economic Forum acknowledged that the admission of the AU gives the continent an “important voice on key global issues”.2 This symbolic admission raises the pertinent question: What does AU’s admission mean for the future of economic governance?

Among all continents, the African continent, in general, and the countries of Sub-Saharan Africa, in particular, are the least embedded in global economic affairs and commerce. This can be confirmed from their smaller share in global trade in goods and services, inadequate Foreign Direct Investments (FDI), and the limited diversity in domestic economic activities. These challenges make it so that access to regional and global markets is an indispensable part of the path to prosperity for countries represented by the African Union. On the other hand, the reality of global affairs shows that geopolitical and geoeconomic headwinds are leading towards acceptance of the rising but mistaken idea that globalisation was an “error” and that its reversal is necessary to accommodate rising powers in the quest to break “Western and US hegemony”.

However genuine the political pressures to reverse globalisation may be to accommodate emerging powers, it is evident that the collective interest of the AU would be poorly served by fragmentation and deglobalisation. Pascal Lamy and Nicolas Kohler-Suzuki asserted in the Foreign Affairs3 that there is good reason to be “sceptical of the doomsayers of globalisation”. Thus, the AU’s accession to permanent membership ought to be used to articulate the important point that, for the world to grow sceptical of globalisation just as Sub-Saharan Africa gets to the front of the queue is hypocritical and would be harmful to all countries.

The AU’s voice in calling for the reinforcement of multilateralism is consistent with paragraph 47 of the New Delhi Declaration. The Declaration acknowledges the challenges that are affecting the global order and then reiterates that, “A more inclusive and reinvigorated multilateralism aimed at implementing the 2030 Agenda is essential”.4 This statement of inclusion must be the consistent refrain of the AU in the reconstituted G20.

By strongly asserting that reinvigorated multilateral institutions and processes are the desired path for improving global economic governance, the AU intends to ensure that its membership of the G20 is not only symbolically important, but also allows it to create consensus within the G20 on what is good for the continent and for the world.

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Opportunity for Global Institutional Reform

The AU’s admission to the G20 holds considerable promise for advancing global institutional reforms for accelerated development. In addition to the essential recognition as a key player in the global economic platform, the membership presents a unique opportunity for the AU to assert its influence and advocate for essential reforms within economic governance institutions for a more inclusive and equitable framework. Primarily, the institutional changes should comprise establishing trade-related reforms, which focus on rebalancing trade relationships; reforming international financial institutions towards strengthening the resilience of African economies; and rethinking strategies for digital innovation to drive economic growth, in cognisance of Africa’s demographic dividend.

The AU’s admission to the G20 holds considerable promise for advancing global institutional reforms for accelerated development. In addition to the essential recognition as a key player in the global economic platform, the membership presents a unique opportunity for the AU to assert its influence and advocate for essential reforms within economic governance institutions for a more inclusive and equitable framework.

As previously constituted, the G20 accounted for over 85 percent of global GDP and 75 percent of global trade. With the admission of the AU, the collective economic influence of the now G21 has amplified. The AU should explore the G20’s strategic objectives under economic policy coordination and international cooperation to drive reforms for expanded international trade. The AU should also propose reforms to the World Trade Organisation (WTO), which will work towards the gradual elimination of trade barriers and securing commitments against increasingly protectionist trends. This advocacy might mean the extension of existing preferential trade agreements to cover the entire AU, leveraging initiatives such as the African Continental Free Trade Area (AfCFTA). The trade-related reforms would not only stimulate economic growth within Africa, but also contribute to a more inclusive global economic governance framework.

Many African countries currently face various fiscal challenges including high levels of public debt, that leave limited fiscal space for critical investments in infrastructure and provision of public services. Exacerbated by weak governance structures and systemic corruption, this has not only affected economic stability but also considerably discouraged foreign investment. As a member of the G20, the AU has the opportunity to advocate for fundamental reforms within institutions like the International Monetary Fund (IMF), the World Bank, and other multilateral institutions to address the persistent economic challenges facing African countries. Through the platform, the AU may propose comprehensive debt restructuring programmes and advocate for sustainable financing and open government initiatives for enhanced transparency and accountability. The AU should also advocate for flexible financing models tailored to the current economic realities of African countries and inclusive development policies aligned with the Sustainable Development Goals (SDGs).

The inclusion of the AU in the G20 could introduce a reconsideration of strategies for digital innovation, especially considering the immense potential of Africa’s youthful population to propel economic growth. With a favourable demographic landscape characterised by a substantial young population, the AU’s participation in the G20 could drive a collective shift towards prioritising and amplifying digital innovation. This strategic realignment may involve advocating for increased investments in technology infrastructure, building literacy for emerging digital technologies, and creating a conducive environment for the growth of technology-driven enterprises.

The inclusion of the AU in the G20 could introduce a reconsideration of strategies for digital innovation, especially considering the immense potential of Africa’s youthful population to propel economic growth.

The reforms should target key domestic and global institutions, including central banks for the modernisation of monetary policies, financial regulatory bodies for enhanced oversight in the financial sector, and government agencies responsible for trade. In addition, international organisations such as the IMF and the World Bank could embrace digital technology reforms by using technology to build a transparent, interconnected ecosystem to better support member countries. Adoption of advanced digital technology8 reforms could mean accelerated development of African states and other emerging economies. Through these reforms, AU within the G20 could advocate for initiatives that not only position Africa as a key player in the global digital economy but also contribute significantly to economic advancement.

• International Affairs
• Indian Foreign Policy
• Economic Diplomacy
• Africa
• India
• African Union
• G20 Presidency
• G20 Summit

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