South Africa’s partial G20 success in 2025

South Africa’s G20 presidency has offered the country an opportunity to demonstrate leadership on the African continent by highlighting and addressing Africa’s financial concerns. Its efforts have been partially successful.

South Africa has indeed raised global awareness about the challenges that African countries face in accessing affordable and stable flows of development finance. The causes of this complex problem are not well understood and, because they implicate many vested interests, are controversial. South Africa, informally supported by efforts from the Business 20 and the Think 20, has focused the G20’s attention on the need to better understand and address them so that Africa can more effectively meet its climate and sustainable development objectives.

Contributing factors include such issues as the methodologies and operating practices of the credit rating agencies, financial regulatory and legal issues relating to the treatment of risk and the fiduciary responsibilities of the creditors, the debt sustainability analyses used by the International Monetary Fund and World Bank, and the relative lack of transparency in Africa’s debt transactions. Africa is also adversely affected by the current governance arrangement and operating policies and practices of the international financial institutions.

Facing the debt challenge 

The treatment of African sovereign debtors in distress or default is another aspect of this challenge that is in urgent need of reform. Four African countries – Chad, Ethiopia, Ghana and Zambia – have received debt restructuring treatment under the G20’s Common Framework. Their experiences, while different, have demonstrated that there are substantial problems with the framework. The fact that it deals with different creditor groups sequentially complicates inter-creditor relations to the detriment of the debtor. In addition, the process is handicapped by the lack of universal agreement on the definition of comparability of treatment for creditors and on how the IMF should deal with environmental and social issues in its debt sustainability analysis. The result is that the process is unduly slow, unpredictable and characterised by a structural bias in favour of creditors.

Despite widespread recognition that the Common Framework needs reforming, there is no consensus on how to actually reform it. The Global Sovereign Debt Roundtable, co-chaired by the IMF, the World Bank and the current G20 chair (in this case South Africa), has not been used effectively for this purpose. This is unfortunate because the roundtable is the only place where all stakeholders in the debt restructuring process can meet informally and, under the Chatham House rule, talk freely about how to improve the process.

Reforming the IMF for
a changing era

Another issue of interest to Africa but on which there has been no G20 action is reform of the IMF. The IMF is effectively, but controversially, the lender of last resort to Africa. Unlike the multilateral development banks, its governance arrangements and operational policies and practices have not received significant G20 attention in many years. This is unfortunate because the IMF’s institutional arrangements and practices need updating to make it fit for purpose in the current era.

South Africa has succeeded in raising the profile of these issues, but its G20 presidency is likely to end without agreement on how to address them.

It is possible that South Africa may still be able to promote an effective G20 response to them. It has taken action ‘in the shadow’ of the G20 to promote more attention to these issues. South African president Cyril Ramaphosa has appointed an African Expert Panel, chaired by former finance minister Trevor Manuel, to advise him on these issues. The panel is expected to submit a report to the president in advance of the G20 summit. There are several things the panel could do to help keep attention on these issues. For example, it could recommend that President Ramaphosa appoint a technical committee to study the barriers and challenges that Africa faces in accessing stable and affordable flows of development finance and to report back in 2026 on its findings with recommendations for corrective action. It could also make proposals regarding an IMF reform process. This report could then be used to advocate for such changes with G20 members and in other international forums such as the African Union, the G7, the United Nations, the G24 and the World Bank–IMF Development Committee.