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South Africa's President Jacob Zuma, Indonesia's President Joko Widodo, Australian Prime Minister Malcolm Turnbull, Brazilian President Michel Temer, Chinese President Xi Jinping, German Chancellor Angela Merkel, French President Emmanuel Macron, Britain's Prime Minister Theresa May, India's Prime Minister Narendra Modi, Mexico's President Enrique Pena Nieto, Italian Prime Minister Paolo Gentiloni, Japanese Prime Minister Shinzo Abe, Canadian Prime Minister Justin Trudeau, South Korea's President Moon Jae-in, Russian President Vladimir Putin, Turkish President Recep Tayyip Erdogan, U.S. President Donald Trump, European Council President Donald Tusk, International Monetary Fund (IMF) Managing Director Christine Lagarde, Netherlands' Prime Minister Mark Rutte, Spanish Prime Minister Mariano Rajoy, World Bank President Jim Yong Kim, Financial Stability Board (FSB) President Mark Carney, European Commission President Jean-Claude Juncker, Saudi Arabia Minister of State Ibrahim Abdulaziz Al-Assaf, United Nations Secretary-general Antonio Guterres, Norway's Prime Minister Erna Solberg, Vietnamese Prime Minister Nguyen Xuan Phuc pose for a family photo at the G20 leaders summit in Hamburg, Germany July 7, 2017.  July 7, 2017.  REUTERS/Ludovic Marin/Pool - RC116487C9D0
Africa in focus

Foresight Africa viewpoint – Africa’s partnership with the G-20: Compact with Africa in 2018

Editor's Note:

Below is a viewpoint from Chapter 6 of the Foresight Africa 2018 report, which explores six overarching themes that provide opportunities for Africa to overcome its obstacles and spur inclusive growth. Read the full chapter on the changing nature of Africa's external relationships here.

Germany’s presidency of the G-20 in 2017 introduced a new initiative for supporting African countries’ development: the G-20 Compact with Africa. The compact brings together interested African countries with the World Bank Group, the International Monetary Fund, the African Development Bank, and other multilateral and bilateral partners to develop and support policies and actions that are essential for attracting private investment. To date, 10 countries have signed up for the initiative and outlined their aspirations and reform programs under a framework adopted by the G-20 finance ministers in March 2017. 


The compact differs from past initiatives by focusing explicitly on facilitating private investment. Rather than relying on public aid flows, it seeks to create a new dynamic under which African governments work with their partners to target reforms that are essential for attracting private domestic and foreign investment. The compact reflects the reality that public resources are scarce, and only private sector-led growth can meet the aspirations of the continent and its young population for enough well-paying jobs.

The G-20 Compact with Africa supports a new dynamic focused on the private sector.

The year 2018 will be a critical period during which to make the compact a success. The initial country reform proposals have been encouraging and have galvanized new and additional technical and implementation support from development partners. However, for the Compact countries to meet their objectives, they need to move from processes that are mainly centered on government and traditional donor groups to a deeper dialogue and more dynamic interaction with the private sector. Partner countries, notably G-20 governments, can facilitate this process if they nudge and incentivize their own private sectors to take a closer interest in the opportunities offered by African economies.

What would an eventual success of the Compact with Africa look like? Here are four ingredients:

  • Compact countries continue to pursue sound macroeconomic policies and invest in state capacity
    and good governance.
  • Countries and their partners invest in deeper diagnostics of private sector constraints including through a systematic, sustained, and open dialogue with domestic and foreign private actors to pinpoint additional reforms that further reduce country risks and remove specific sector bottlenecks.
  • G-20 governments encourage close engagement of G-20 private sector actors with Compact countries to help transform risk perceptions and identify new investment opportunities.
  • International financial institutions, such as the International Finance Corporation, and other development finance institutions support new investments with their instruments where risks remain too elevated.

The G-20 Compact with Africa supports a new dynamic focused on the private sector. It relies on close interaction of the public and private sectors to open space for private investment. African governments have a unique opportunity in 2018 to leverage the G-20 initiative and build a better future for all Africans.


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